Home ownership costs to rise: Report

Home ownership costs in Canada rose for the third
straight quarter in early 2010, and those costs are going to get higher
as interest rates rise this year, according a housing report released
Tuesday by RBC Economics Research.

OTTAWA — Home ownership costs in Canada rose for the third straight
quarter in early 2010, and those costs are going to get higher as
interest rates rise this year, according a housing report released
Tuesday by RBC Economics Research.

The RBC Housing
Affordability measure, which identifies how much pre-tax household
income is needed to own a home, rose nationally across all housing types
in the first quarter of 2010.

The detached bungalow
benchmark measure rose by 0.9 of a percentage point to 41.1 per cent,
the standard townhouse inched up by 0.4 of a percentage point to 33 per
cent, the standard condominium climbed by 0.5 of a percentage point up
to 28.2 per cent and the standard two-storey home increased by 0.6
percentage points to 46.8 per cent.

Robert Hogue, senior
economist at RBC said in the report that although home ownership became
more costly in the first quarter of 2010, affordability is still below
peak levels reached in early 2008 and is not expected to exceed those
peaks.

"We expect affordability to deteriorate throughout
2010 and 2011, but this should be limited as more balanced supply and
demand conditions will take much of the steam out of the housing
market," he said.

The main factor for the rise in home
prices over the next year will be from the expected rise in interest
rates, "as the Bank of Canada moves towards raising the current
exceptionally low rates to more normal levels through the second half of
this year and in 2011," according to the report. Bank of Canada
Governor Mark Carney is widely expected to begin slowly raising interest
rates as early as June 1, leading up to an overnight rate of 1.5 per
cent by the end of the year.

"We believe that the
spectacular rally in housing prices over the past year will soon end, as
rock-bottom mortgage rates increase," wrote Hogue, adding that the
improving economy and rising incomes should keep home affordability in
check.

With the exception of Alberta, home affordability
measures deteriorated across all provinces. The affordability measure
for a detached bungalow in Canada's largest cities is as follows:
Vancouver 73.4 per cent (up 4.8 percentage points over the last
quarter), Toronto 49.1 per cent (up 0.4 of a percentage point), Ottawa
40.3 per cent (up 0.3 of a percentage point), Montreal 39.7 per cent (up
0.9 of a percentage point), Calgary 36.5 per cent (down 0.3 of a
percentage point) and Edmonton 32.0 (down 0.5 of a percentage point).

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Year after year Shaun is recognized as one of Vancouver's leading luxury real estate agents. As a 10 year resident of Coal Harbour Shaun began his real estate career specializing in the sale of luxury condos in the area. In 2013 he opened his current office on the Coal Harbour seawall and continues to serve as a neighbourhood ambassador to buyers and sellers from around the world.

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